Reid-Smith v Merrett & Butcher No. DCCIV-01-62

ROLAND REID-SMITH - v - MELISSA MERRETT & ANDREW BUTCHER
[2002] SADC 152
Judge Bright
Civil

This matter comes before the court for assessment of damages. On Friday 23^rd January 1998, the plaintiff was a passenger in his own car, which was being driven by his then partner, Miss Merrett. They were travelling to Moonta on the Kadina Road a few kilometres west of Kulpara. They were part of a line of traffic moving at about 90 kilometres per hour. Miss Merrett pulled out to pass vehicles ahead of her and accelerated to around 110-120 kilometres per hour. As she drove down the right hand side of the road, and after passing one or two cars, a car in the line moved to its right a little – presumably its driver intended to pull out to pass, or to check whether he or she could.
At that moment the plaintiff’s car was fairly close to that car. It appears to have gone back into line. In any event, Miss Merrett swerved to her right, her right hand wheels went off the bitumen and she lost control. Probably, though it is not entirely clear, she over-corrected and swerved back, then swerved to the right again and went off the road to the right. At this stage the vehicle slid across the dirt verge, through a post and wire fence and into a paddock. In the course of this it rotated completely at least once and, perhaps, several times. It remained on its wheels, without rolling. It was obviously a rough ride.
No contact was made with any other vehicle, but, in crashing through the fence there was wire damage to some panels and a (plastic) bumper bar was half pulled off. The plaintiff pulled it off completely after the accident. The car remained driveable and he eventually took over driving and went on his way.
Neither the plaintiff nor Miss Merrett suffered significant physical injury. I have no reason to doubt that the plaintiff, who was wearing a seat belt, was thrown around pretty violently, or that he was sore where the seat belt restrained him. He says he was sore in his neck for a few weeks and I accept that.
The important part of the assessment is the plaintiff’s claim that he suffered a protracted psychological reaction, which made him miserable for a year or two and greatly interfered with his capacity to run his business.
The plaintiff was born in 1960. His childhood was unremarkable. He went to a private school and, like so many others, did not do as well academically as he might have. He is not unintelligent. He was lightly built and rather small. He was, to some extent, picked on by other boys. Possibly as a result, he took to working out in a gym and to body building. By the time he was 20 he was a fit, well-muscled man. In my view, the evidence shows him to be a rather obsessive person. Fitness and health are obsessions, at least at times, for him. When he was young his mother had a business selling various “alternative health” products. He is a believer in the efficacy of these products and of various practitioners who work in this field.
He is very sensitive to his well being. For example, on becoming concerned at a habit of nail biting, he ascertained to his own satisfaction that factors in his diet caused this – so he was able to correct it. He is rather pre-occupied with maintaining his health.
An aspect of this is his belief that he needs regular chiropractic manipulation, not so much to correct existing problems of significance, as to maintain health and to prevent future problems. He calls it maintenance. He had had such a manipulation shortly before the accident. To help him relax on the trip to Moonta, he had borrowed a soft neck brace from his sister and also some Valium. At the time of the accident, he was wearing the collar.
His chiropractor’s records note complaints of pain in the neck before the accident. Having regard to his practice of seeking regular chiropractic assessment and to his pre-occupation with his health, I cannot conclude that there was anything significantly wrong with his neck. Had there been a large claim in respect of the neck, this question might have been more important than it is. As the claim for physical injury is only a very minor one, for an injury commonly suffered in car accidents, and for an injury that was soon healed, I do not think it matters much from a physical point of view.
On leaving school, the plaintiff worked (and travelled) in such jobs as labouring in army kitchens. His family included a father who was a solicitor, a mother who ran her own businesses and siblings who did the same. He realised that he needed to lift his game. It is not surprising to me that he became as pre-occupied with personal and business development as he had been with his physical development. He has amassed a library of hundreds of books, audio and video tapes dealing with various aspects of self improvement. He goes to seminars. He arranges private coaching and motivational classes. He is attracted to alternative approaches to self development, such as rebirthing.
As with his physical health, his attraction to these courses, consultations and therapies should not be seen as indicative of significant pre-existing problems. They reflect his personality, but do not demonstrate, for example, long standing depression or other psychiatric illness.
All that I deduce from his pre-accident history is that he was rather more self aware than most people and rather more concerned to sort out, or eliminate, what he saw as imperfections in himself. He did something about those transient problems which many others choose to ignore. In particular, his general practitioner Dr Gilmore, a sensible and experienced practitioner, who had known him for many years (he was a patient of the same practice all his life) had no record of significant problems and did not regard his frequency of attendances, or the matters of which he complained as being at all abnormal.
One particular aspect of his pre-accident history was the subject of a good deal of evidence. Since adolescence he has smoked marijuana, at some times quite heavily, at others not at all, or hardly at all. He sometimes gives up for months or years. Counsel for the defence raised the possibility that, at relevant times, he was such a heavy smoker that any inability, or at least part of it, to prosecute his business affairs should be attributed to marijuana rather than the accident. It is true that, on at least one occasion, he had undergone counselling and what I take to be a form of hypnotherapy to assist him to give up or reduce his intake. Having regard to his predilection for seeking outside help with his perceived problems, it does not surprise me that he should do so in this case. Nor does it give any strong indication that the problem was of any severity.
He says he used it as others use tobacco or alcohol. Fluctuating levels of consumption might well reflect periods when he felt under greater or lesser pressure. At times he might use too much. I cannot conclude that he used so much as to fall victim to the sort of helpless apathy and indecision which some believe to be a consequence of habitually smoking too much marijuana.
He claimed he never smoked during working hours, and his employees never claimed to have seen him smoke, or to have been apparently under the influence of marijuana. Evidence from Miss Merrett and Miss Allanson suggests that things were not quite so clear cut. It will be my conclusion that there is no evidence that consumption of marijuana affected his business activities before the accident. However, when he was at his worst after the accident he did smoke at times when he would have been a better business man if he had not. This is not, to my mind, an indication of a particular medical syndrome, any more than the fact of a person occasionally lunching too long and too well establishes that he is an alcoholic, properly so-called.
The final aspect of his pre-accident medical history on which I must touch is the suggestion that, following the death of his father, he suffered clinical depression which carried over into the period after the accident. He claims to have felt considerable, but perfectly normal grief, with which he dealt like anyone else. There may have been some increase in his smoking for a while. Others saw no more than a normal grief reaction. No one saw a descent into clinical depression. I am not persuaded that there was such a descent.
I turn to his pre-accident business history. I mentioned that he was, for some years after leaving school, content to knock around, to travel, and to work in pretty unskilled jobs. Then he decided to settle down. He had worked as a casual handyman/gardener for a few people. He had developed an interest in plants and landscaping.
He decided to set up a business hiring plants to offices, shops, businesses and the like. It is clear that he has (and had) a flair for selecting plants and for designing (mostly indoor) arrangements or settings. He knows how to pick good quality plants. He learned how to select appropriate containers (both to protect the plants and to prevent spillages onto customers’ carpets). He developed irrigation systems for watering and fertilising his plants. He was enthusiastic and personable, so he became a good salesman. He was able to negotiate contracts with customers at top-of-the-market rates. He was prompt and efficient. He did not enjoy office management, accounting or book-keeping and was not as good at those activities. He took on various employees and seems to have managed them well.
To my mind, his greatest weakness was his propensity to run his businesses on less than what most would regard as the minimum amount of capital. I think he regarded it as one of his strengths. He would borrow a few thousand here and a few thousand there. He was always borrowing from one to pay off another. Some borrowings were from friends and relatives at (I presume) favourable rates of interest. Other borrowings were on overdraft or on credit cards at expensive rates. This was certainly the pattern after the accident. He says it was what he had always done
The list of customers of a plant hire business is rather like a rent roll in a real estate letting business. Such lists or rent rolls are saleable. The value is commonly calculated as a multiple of the monthly hire income. The multiple will vary with the quality of the business. For example, a business hiring poor quality plants, requiring much maintenance, to short term clients who were not regular payers would attract a far lower multiple than a business with opposite characteristics.
The multiple which has commonly applied in the plant hire business is between about 8 and about 12. When the plaintiff sold his first business he achieved a multiple of 15 – i.e. he got top dollar (he claims he should have got more). No doubt this reflects his skill in selling his business, but it must also reflect an assessment by the purchaser that the business was an unusually good one.
Over about 4 years, he attracted about 100 clients, mostly long term, and was able to sell for nearly $300,000. However, that sale price also reflected the fact that he had drawn out very little for his own wages. It was subject to his obligation to repay borrowings. As defence counsel pointed out, if the resulting profit were spread over 4 years, the annual return to the plaintiff was broadly similar to the average wage for all male Australians at the time. It was a satisfactory, but not spectacular result.
The plaintiff’s next business was a nightclub. For a period of time it was very successful. But, as with the previous business, it was under capitalised and dependent on the pattern of borrowing I have described. After a few years, perhaps because of the fickleness of patrons, perhaps because of increased competition, its debts increased to the point where it became insolvent and was put into liquidation. The plaintiff went bankrupt. The plaintiff believes his major mistake was to hang on to the business for too long – he should have sold it before debts got out of control. He may well be right, but, as with the previous business, there is no evidence that any return would have been spectacular after allowing for debts, borrowings and a sum in lieu of wages for himself.
The plaintiff was industrious. He researched his projects carefully, some would say obsessively. He made his judgments. He has great apparent confidence in his abilities. No doubt that is a necessary thing if one is to succeed in business. His motivational training and business coaching would have helped to develop it. From where I see him – and I mean him no disrespect – he is another small business man. He is better than many, and worse than some. With reasonable luck he can make a business go, but because he is, habitually, under capitalised, he is more vulnerable, than his optimism justifies. On several occasions he mentioned the ratio of failures and successes in small business in Australia, as if to justify his belief that he has been far more successful than the average. I see him as an average business man and will assess any post accident problems against that standard.
Some doctors (and others) have diagnosed that the plaintiff suffered from post traumatic stress disorder. There is some controversy about how violent the precipitating incident must be to permit such a diagnosis. True it is that, on the scale of movie police chases, or car races, this was not a violent incident, either in what took place while it was happening, or in what was revealed when it came to an end. I see no reason to doubt that the link between an incident and its psychological outcome is largely the victim’s subjective perception of its danger and of its consequences or potential consequences to him or her. I accept that there must be a point at which an incident is so trivial that it could not be regarded as capable of causing such a reaction.
In this incident a car went out of control at over 100 kilometres an hour. It swerved and spun violently. It must have bounced over somewhat uneven ground. The manoeuvres were performed in a cloud of stones and dust. There was an awareness of going through a fence. There was a clear potential for the results to have been far, far worse. The car could easily have rolled. It could easily have collided with other cars. In all the dust and excitement, there could have been little appreciation of whether it was heading into an empty paddock (as was the case) or towards some substantial object.
Miss Merrett was shocked and unable to drive on. She said she was frightened. She says she was subject to fears and flashbacks for a good while. She did not appear to be an unusually susceptible person. I expect I would have been pretty alarmed, too. The plaintiff said he was frightened. He felt helpless and unable to control his destiny. Miss Merrett said: “I love you”, presumably in apprehension of death.
It is Prof. Goldney who asserted that this accident was not capable of causing post traumatic stress disorder. Prof. McFarlane and Dr Kelly believed it was. Prof. Goldney had formed an unfavourable view of the plaintiff. He thought he had not been frank. I will have to deal with that later, but I confine myself at present to the conclusion that this led Prof. Goldney to be somewhat antagonistic towards the plaintiff. This, I suspect, coloured his view that the accident could not have caused post traumatic stress disorder. I prefer the evidence that it could. Whether it did, or not, is another question.
After the failure of the nightclub, the plaintiff decided to go back to what he knew and he set up another plant hire firm. Again he was good at getting customers and dealing with them. He was good with his plants and equipment. He concentrated on long term clients and encouraged them to take contracts by the year (rather than the month, or quarter), preferably paying in advance. Again he was less good at the “office” side of things. Once more he was perilously under capitalised and was forced into his usual merry-go-round of borrowings, frequently of expensive money, and repayments. Again his plan was to take out little money for himself, to plough back as much as he could to expand his business and to look to the day when he could sell it to make his profit. But, it did survive – indeed, it still exists and was recently sold. He had plans for expansion and it was expanding. He had a number of employees, helping with book-keeping, plant maintenance, office work and other aspects of the business.
Following the accident, the plaintiff drove on to Moonta and spent a relaxing Australia Day weekend there. He had some neck and shoulder pain, but not a great deal. He had been sufficiently compos mentis to deal with police and ambulance at the scene of the accident and to collect, or arrange for collection of names of witnesses.
The plaintiff said something to Miss Merrett about the need to “begin a paper trail” so that if, in years to come, it went to court, details would be remembered. I suspect that those acting for the defence saw this as an indication that the plaintiff was at once digging for money and showing a desire to make the most of the situation. When this was put to the plaintiff, he said that all he meant, and all he did, was to act as his father, a solicitor, had always told him to act in such circumstances. Such matters might go to court (at the least, there may have been charges for Miss Merrett to face) and it was wise to make contemporary notes. In referring to making a paper trail he was not indicating an intention to create a false trail.
I accept him on this. If it had been his intention to create a false trail, he needed little in relation to the accident. Liability looked obvious enough and there would have been little reason to suspect much controversy about the circumstances. On the other hand, he needed plenty of documentation in relation to his claim for disability and business loss, but, although the defence eventually dragged a huge volume of papers out of him by discovery, there is no sign that he was creating proof of his claim. On the contrary, his records were not very good, though his book-keepers were eventually able to collate and tabulate a great deal of information from cheque butts, invoices and the like.
In the end, it has not been my view that the plaintiff was deliberately untruthful; but I do think he has exaggerated in his own mind the extent of the success that would have been his, but for the accident. In fact, his counsel puts forward a claim based on a comparison between the actual results and those that would have occurred if the business had merely continued at the rate achieved at the time of the accident. The plaintiff’s expectation of growth is put forward as no more than a contingency to balance or mitigate the contingencies said by the defence to suggest he would have done no better than he did in any event.
For the first month or so after the accident, the plaintiff felt no more than the minor physical problems I have mentioned. They resolved in the ordinary way. But he seems to have begun to descend into depression by about March. It is hard to be precise. He seems not to have recognised it, or to have denied it. Business went on as usual. Income showed no change until about April. That may be partly because he functioned pretty normally until then and partly because work done and bills sent before then generated continuing income.
Miss Merrett saw a great deal of him. They had become close in August 1997. Before the accident she thought he was somewhat prone to mood swings, but that, afterwards, it became more pronounced. His consumption of marijuana increased. It appeared that now he smoked during the day. They went out together a little less. He began to complain that he couldn’t face business; he was not following up quotes or sending out bills. His libido seemed unchanged. The relationship ceased in May, though it continued on an intermittent basis until October.

After May, the plaintiff began to be reclusive. He would lock himself in a room, apparently all day. In June, he attended some sort of seminar or course, with which he became obsessed, said Miss Merrett. By October he was not back to normal, but was better than he had been. In June/July, she lent him $4000, rather against her better judgment. She had to chase pretty hard to get it back. He volunteered interest at 20%, apparently not per annum, but as a fee for a few months.
Miss Allanson was an employee who formed a close relationship with the plaintiff. She lived with him from 1994 until August 1997. She said that he was generally happy and enthusiastic, but had mood swings. She said he was devastated by his father’s death. He sometimes smoked marijuana. After being off it, she thought he went back to it in July/August ’97. She began to see him again from time to time after May ’98. She heard of the accident, but noticed no particular change in him. She returned to working in his business, attending to various administrative tasks. She saw him several times a week until December ’98. She was not aware of him locking himself away in a room. He answered her telephone calls. She does not appear to have noticed much change in him. He did complain to her a bit and she appears to have heard a bit from others.
Mr Gould trained and is registered as a psychologist. However, he does not practice as such. He is what he calls an executive coach. He trains business men. One of his clients was the plaintiff. He saw him on a number of occasions before the accident. He saw him four times after the accident. He learned of the accident, but it was no part of his work to deal with it. However, he suspected that the plaintiff had become depressed and suggested he discuss this with his general practitioner.
Dr Gilmore referred him to a psychiatrist, Dr Kelly, who went on to see him on some 27 occasions. He began to see him on 3 November 1998. The plaintiff had been prescribed mild doses of Cipramil by his general practitioner, but they were not doing enough and so he was referred to Dr Kelly. Dr Kelly diagnosed post traumatic stress disorder and a major depressive disorder. During 1999 Dr Kelly thought that good progress was being made. His symptoms included avoidance behaviour at work – particularly in the accounting side of his business. He suffered from hypervigilance and intrusive thoughts. He had some suicidal thoughts. His concentration had been poor.
Dr Gilmore had seen him on 29.1.98, a week after the accident. He complained of neck and back pain and a headache. He was self medicating with Valium and Mersyndol. He was wearing a neck collar.
In early February he was complaining of vagueness and confusion. He still got headaches. Even at this stage, it was Dr Gilmore’s conclusion that he was suffering from some form of post traumatic stress from the accident. Later in the month the range of psychological symptoms complained of had increased. He was anxious, slower than normal to make decisions, procrastinating, sleeping poorly, and felt his libido was down.
During late March, apart from the odd headache, he was physically well. A psychologist had suggested he try Cipramil. I guess this was Mr Gould. In July he reported that he was better, but not completely well. He had now gone to a solicitor and was feeling stressed at going through the accident again.
In September he sought referral to a psychiatrist – and was referred to Dr Kelly. In February 1999 he was feeling stressed and unable to cope. He requested and was given a referral to another psychiatrist. Dr Gilmore remained confident of his initial diagnosis of post traumatic stress disorder.
Prof. McFarlane first saw the plaintiff on 28.3.2000, apparently on a medico- legal basis, sent by his solicitor. Prof. McFarlane came to the same diagnosis as Drs Kelly and Gilmore. – post traumatic stress disorder and a major depressive disorder. Prof. McFarlane took a detailed history. He noted some agitation and even sweating by the plaintiff as he gave it. Prof. McFarlane believes him to be genuine. He arranged for a cognitive behaviour therapy program to be given and noted significant improvement. By the end of 2000 Prof. McFarlane thought him fit to manage his business.
The only doctor to cast doubt on these diagnoses is Prof. Goldney. He felt that the plaintiff’s answers to various of his questions were, at best, disingenuous and, at worst, just not true. He, therefore, had little faith in the accuracy of the history he took and doubted the severity and extent of the symptoms. I cannot explain why the plaintiff behaved as I accept that he did towards Prof. Goldney.
If I thought him purely a money-digger, this inconsistency would be very worrying. In particular, if he continued to complain of significant problems for which there was no easy explanation, I would be concerned. However, he acknowledges that he has substantially recovered and is able to run his business. In my experience, most malingerers do not get well before judgment. For this reason, I generally prefer the opinions of Prof. McFarlane, Dr Kelly and Dr Gilmore to that of Prof. Goldney.
A second level of complication is that Miss Merrett and Miss Allanson, who both saw a great deal of the plaintiff during the year after the accident, and who knew him well, did not see much wrong – certainly not enough to suggest the overtly depressed behaviour observed by the people to whom I now refer.
I have mentioned that Mr Gould – though not a treating therapist is trained as a psychologist. He saw enough to suggest a discussion with a general practitioner and possible referral to a psychiatrist.
Mr Masters is a very old friend of the plaintiff. They were at school together. Their parents were friends, and they lived near to each other. They have maintained a close friendship since. At school, he was something of a protector to the then slightly built plaintiff. After school, he too knocked around in a variety of jobs. It was the plaintiff’s example in getting into business that set Mr Masters on the rails and now sees him as a financial adviser, with his own firm in Mt Gambier, where he also serves on the board of a credit union.. He went on to get tertiary qualifications.
It happens that Mr Masters has suffered from clinical depression. His brother also suffered from it, eventually committing suicide. In short, he knows more about it than most laymen. He described the plaintiff before the accident as enthusiastic and dynamic – “a rah rah”. When the plaintiff’s father died, the plaintiff was obviously upset, but not inappropriately so. Soon after the accident he noticed that the plaintiff was quieter, was no longer “hassling”. This continued until, by about the middle of 1998, Mr Masters was becoming seriously concerned. His personal and family history made him peculiarly aware of the plaintiff’s state. He believed he knew the symptoms and began seriously to worry whether the plaintiff might suicide. He recommended going to a doctor. On one occasion he passed the plaintiff’s house. It was all shut up, which looked a bit unusual, so he called. After protracted knocking on the door, it was opened by the plaintiff, who was naked. It appeared he had been lying on the floor in a darkened room. This was about May or June 1998. During 2001, his perception is that the plaintiff improved considerably – but was not back to what he was before. He assumed the plaintiff was benefiting from medication.
Mr Master’s partner was also a part time employee of the plaintiff. She shared the cost of living with Mr Masters, so it was a concern for both when the plaintiff failed to pay her wages, or gave her cheques that were not met. It seemed that the plaintiff’s office was now poorly managed, though he had little knowledge personally.
As a financial adviser, he had some views about the plaintiff’s business skills – which are generally in line with what I have recorded. He thought the plaintiff had invested too much money in research for the nightclub and had aimed it at a transient market. He had watched it decline and had not been surprised at the ultimate failure. In the plant hire business, he thought the plaintiff should have concentrated on selling and should have got others to administer the office.
Mr Master’s partner, Miss Magday, thought the plaintiff had been energetic and effective before the accident. After it he no longer concentrated. He hopped from task to task, never getting anything finished. There had been occasional problems with pay before the accident, apparently quickly resolved. During 1998 it became a significant problem. She never saw the plaintiff smoking marijuana. The business seemed to be running down a bit. She was aware that there were not many new clients.
Mr Hill was an employee since 1996. He had met the plaintiff in 1994. Mr Hill is a young man of obvious intelligence and ambition. He no longer works for the plaintiff. He joined the plaintiff because he was impressed with the plaintiff’s abilities and wished to learn. Of the plaintiff he said:
“He was always a very ideas generated sort of person. He had lots of good ideas. Not all the time did he know how to put them into place and one of the things I was good at was he would come in and he would say ‘Gareth, what do you think of this great idea?’ and he would bounce things off me and that’s how we effectively worked well together …he was a very motivated person …”
On the death of the plaintiff’s father, Mr Hill observed that the plaintiff grieved deeply for a couple of weeks, but saw no long term effect.
After the accident, having always been “contactable” he began not to answer messages. Mr Hill needed instructions about various matters and now had to chase the plaintiff up. The plaintiff was now vague. Having been a fastidious dresser, he was now often dishevelled and unshaven. He lost weight. “There were some days when I would go in and I would find him huddled up in the front room in the dark in just his underwear in a foetal position, crying”. This was in April/May 1998. It went on for about 2 months.
Mr Hill did his best, with the other employees, to cover for the plaintiff. They took over almost all his work. It was hard going because there was not enough money to pay wages and bills. It appeared to Mr Hill that the plaintiff was unwilling to accept that he had any problems – either personal, or in his business. Mr Hill left in February 1999.
Other employees told a similar story. I accept that they did not have precise business information, but the perception of a once flourishing business, now in decline, and a boss who went the same way is consistent.
Two book-keepers confirmed the pattern of borrowing, repaying and shuffling debts.
Another old school friend was Mr Rimington. He was particularly interesting as he now lives in Western Australia, where he is chief executive officer of a large publicly listed company. He has considerable business expertise. He is also well enough off to have been the source of various loans to the plaintiff over the years. He has kept in close touch. He also trained as a family counsellor and has some knowledge of depression.
He knew about the failure of the nightclub. He had loaned various sums to the plaintiff in relation to it and the earlier plant hire business. He was familiar with the new business “Affordable Plant Décor”. Before the accident he continued to lend to the plaintiff on a short term basis and was always paid back. Before the accident he had been considering a proposal for a loan of $50,000. The intention was to consolidate the debt from the plethora of small, expensive, loans. The obligation to service them was stressing the plaintiff’s cash flows.
Incidental to the loan was Mr Rimington’s belief that the plaintiff’s business needed to be put on a more business-like basis. He required the plaintiff to draw up a business plan and to accept some discipline. Mr Rimington recognised that the plan he received was very optimistic. He did not rely on it to any extent. It was prepared just before the accident.
After the accident, as before, Mr Rimington would speak to the plaintiff on the phone frequently and would visit Adelaide several times a year. When here, he would see the plaintiff frequently. By about mid 1998, it was Mr Rimington’s view that the plaintiff was very depressed, gloomy, and in despair. He was becoming irrational. “I think he was sort of starting to hide from the world. He had trouble coping with life. He had suicidal thoughts.”
Further small loans were made, but Mr Rimington was never satisfied to lend $50,000. At one stage the plaintiff wanted Mr Rimington to take over the whole business, as he could not run it.
Mr Rimington does not approve of cannabis. He was aware that the plaintiff smoked it from time to time. He wanted the plaintiff to stop. However, he was never aware of it being such a problem as to affect the plaintiff’s ability to work. He only ever saw him smoke once.
In January 1999 Mr Rimington wrote a lengthy appraisal of the problems in the plaintiff’s business and made various suggestions. He was clearly trying to shake some sense into the plaintiff. He was particularly concerned at the debt ratio and the gross under capitalisation. He was alarmed that, without proper budgets, the plaintiff had no way of knowing what he could spend. Continuing to borrow was a track to ruin. He was concerned that the plaintiff’s personal living expenses were also financed by borrowing. He needed to withdraw and consolidate in order to turn the business around.
Mr Marsh is the proprietor of a competing business, to whom the plaintiff has now sold most of his clients. He is familiar with the industry. He has paid a multiple of 15.8, a high figure, in the full knowledge that it is high. It is he who told me about the quality of the plaintiff’s plants, maintenance systems, clients and the fact that they were tied to tight, long term contracts. He knew that the plaintiff must have been in financial straits, as he advanced him a lot of money over a year or so against the “security” of holding the contracts which he eventually is purchasing. He is obviously frustrated at the fact that closing a deal with the plaintiff has taken so long. It has largely, de facto, occurred, but details are still not finalised and no final contract of sale has been signed.
To sum up this lay evidence, it clearly shows that the plaintiff changed from being an energetic, effective man before the accident, to one who was just not coping. He showed all the signs of being depressed. Such a condition is not completely constant; it is also altered by medication – so it is understandable that some people might not see it. Was he able to, and did he present a better face to Miss Merrett and Miss Allanson? It is their evidence which causes me most concern. I cannot offer any clearly proved explanation. If his trouble was avoidance of business, did he have less reason to “avoid” them? Despite that, I accept the proposition that there was very significant deterioration.
It is not the case that all depression is characterised by avoidance – in this case of work obligations. It is one of the characteristics of post traumatic stress disorder. It is, therefore, consistent with the diagnoses of Drs Kelly and Gilmore and of Prof. McFarlane. But post traumatic stress disorder is not an absolute, it varies in severity, from case to case and time to time. One need not be paralysed by it at all times.
If the plaintiff’s problems could have been solved by one, or a relatively few, decisions, were there enough days when he was sufficiently well to make those decisions? One obvious decision would have been to appoint a competent office manager, leaving him free to concentrate on aspects he enjoyed. In my view, it is a gross over simplification to think that this is a simple decision. There does not seem to have been the money to pay a manager. The tightening up of office procedures, particularly the proper collection of debts and the sending of timely bills would have helped, but it is not clear to me that the extra cash flow would either have paid for a manager or have overcome the underlying cash flow problem. More clients and more revenue were needed – and the plaintiff was not in a good state to be a good salesman. Insofar as there is an (unpleaded) suggestion that the plaintiff has failed to mitigate his loss, that is to be proved by the defence, and has not been proved.
On the other hand, the significant problems in the plaintiff’s business both before and after the accident must be recognised and taken into account in assessing the probable effect of the accident. The plaintiff looks to be compensated for the difference between what the business would have earned if it had continued as before the accident and what it actually earned during the period of about April 1998 to late 2000, by which time, though he was not 100%, he was quite capable of running a business. The defence contends for a shorter period.
Two accountants provided expert opinion. The final version of their evidence came very late. Though, ultimately, discovery was huge, I suspect that that was the result of earlier reluctance by the plaintiff to provide a proper basis for assessment, which, in turn, led to such suspicion on the part of the defence that it chased more documentation than one would commonly expect. Having said that, it does seem to be the case that, only when we descended to an analysis of the bank statements, and the extent to which they disclosed the making, repaying and shuffling of loans, could we appreciate the true position. The usual tax returns and profit and loss statements did not make that clear. The avalanche of paper also caused the accountants to prepare successive reports. In the end, and after consultation between the accountants, there is no difference in principle between them. They have provided a calculation of the difference between assuming pre accident rates and what actually occurred. There are detail differences, but not so significant that it needed more than to tender a report from the defence accountant, rather than to call him.
What they do not do is attempt to ascertain why there is a difference. I think the plaintiff has proved a diminution in his earning capacity. I have no doubt he was going to exercise (and did exercise) his earning capacity in his business. That business survived. It is not a contingency that it was going to collapse. It did not do as well as it had been doing. Although the plaintiff firmly believes it was going to do much better than it had been doing – that the upward trend in turnover would have continued, I think it far more likely that the plaintiff would have struggled against his debts to keep it going, even at pre accident levels. I think it is more likely that there would have been a period of withdrawal, consolidation, or diminution in any event.
It is easy to see that his inability to sell was directly linked to an absence of new clients. But that should not have diminished income. The existing clients were, substantially, locked into their contracts. The capital expenditure on plants and equipment for those clients had been met. It remained only to chase up any unpaid bills (and many were pre-paid) and to maintain the hired out plants and equipment. There were some sales of plants and surplus equipment and materials which could be lost if there were no salesman, but they were very small compared to the income from rentals. Some 73% of the income of the business came from long term hire clients. Most of the rest was from shorter term rentals (i.e. monthly, quarterly) with some for one-off occasions. A failure in selling would affect these sorts of sales.

Arguably, staff levels were higher than strictly necessary – arguably because they were intended as a base for expansion. If so, when expansion ceased, it was not necessary to keep them all. A number were only part time casuals.
But the real problem was that the income did not meet the costs of running the business and also of providing a living wage (whether by way of wage, or through drawings or loans) for the plaintiff. Borrowings and the cost of servicing them increased. The money to fund expansion was not there. Having a chief executive officer in a parlous state was obviously no help – but it was not the whole story.
Mr Holmes reported on the loss (i.e. the difference between income to the plaintiff projected at the pre-tax rate and what actually occurred) for the period from the accident to 30.6.2002. He took into account liability for tax, superannuation, etc. The figures are based on tax returns for the plaintiff and for the business. He allowed for interest in respect of borrowings to cover diminished revenue. On that basis, the difference is $185,155.
He also noted a diminution in the income from long term hire contracts – which are the most saleable part of the business. Again he allowed for relevant Capital Gains Tax, etc. On that basis, to 30.6.02, the difference is $36,238. The total of these figures is $221,393.
His calculations are detailed in his report, and, as calculations, are not in dispute. The report sets them out in such a form as to enable me to select shorter periods.
The income differences to date are as follows:
1997/8 1998/9 1999/2000 2000/1 2001/2
$10,845 $30,288 $32,761 $54,940 $56,322
The total is $185,156.
I propose to assume, broadly, that the effects of the accident had run their course by mid 2000. On that basis, the only losses to which it could have contributed are those for the first 3 years shown above. The total of those figures is $73,894. Doing my best to balance the favourable and unfavourable contingencies which faced the business during that period in any event, I think it would be fair to attribute $50,000 of the loss to the accident. The figures for loss of long term clients are not available in that form. The assessment is made as of 30.6.02. On my assumptions, there has been a 2 year period during which the plaintiff has been able to work. Since 30.6.2000 many new, long term clients have been procured. Presumably some have been lost. It is not possible to say exactly who was lost before then, or exactly why. I propose to allow $20,000 on this account. That gives a total for loss to date of $70,000.
As a result of having once had post traumatic stress disorder and depression, the plaintiff is more susceptible to it in the future. As with the calculation of past loss, there was, no doubt, always some predisposition to these problems as part of the way the plaintiff is. I have not thought that any such predisposition was sufficiently aggravated by factors in the plaintiff’s history such as break-ups with girl friends, the death of his father, or the pressure of coping with debt, to amount to a separate cause, or novus actus. The defence must take the plaintiff as it finds him. In considering adverse contingencies I did allow for a possibility that these factors might have affected the plaintiff’s performance at work. Overwhelmingly, I have concluded that, but for the accident, the plaintiff would not have become clinically depressed, or had symptoms like those of post traumatic stress disorder. The major contingencies were inherent in the business and the way it was financed.
For the future, I assess the worth of future loss of earning capacity (occurring in non-compensable circumstances and, possibly, at some distant period in the future) at $1,500.
I must fix a number in the 0-60 scale for the injuries, both physical and mental and their effect. I fix the number 7. The multiplier is 1530. The result is $10,710.
I turn to special damages. As I understand the schedule, total special damages claimed, and agreed as to quantum are $10,700.60. Of this amount $677.50 has already been paid by the defence. I am asked to allow for the contingency that some treatment may have been needed in any event and for the fact that two accounts from Prof. McFarlane are in 2002 and, so too late to be caused by the accident. The amount already paid by SGIC no longer forms part of special damages. I deduct it and then round down the total to $10,000 to allow for the other arguments, which I do not regard as strong.
Having allowed a little for possible future loss of earning capacity, which I regard as not very likely, I do not propose to add a separate sum for future special damages. The one figure is sufficient to cover both.
I summarise:
Past loss of earning capacity  $70,000
         Future loss of earning capacity   1,500
         Wrongs Act damages   10,710
         Special damages    10,000
  $92,210
I will hear the parties on interest and costs.

[2002] SADC 152

2 December 2002